Announcer: Welcome to the How to Rent Vacation Properties by Owner Podcast Series. Your host is best‑selling author and vacation property expert, Christine Karpinski. Today's show is brought to you by HomeAway.com, the world's most complete marketplace for vacation rentals. Join the network at HomeAway.com.

Christine Karpinski: I'm Christine Karpinski. Thank you for listening to the How to Rent Vacation Properties by Owner Podcast. Today's guest is Richard Colwell. Richard lives in England and he owns property in Canmore, Alberta, Canada.

As you can imagine that's quite a distance to rent all the way from the Pacific coast of Canada and all the way to England. So, we're going to hear Richard's story and listen to some of the different challenges that he has that obviously, we wouldn't have if we're renting here in the States to another property here in the States.

So, I'm really excited to speak to Richard today and hopefully we can learn all sorts of things from him. Richard thanks for joining us.

Richard Colwell: Hi Christine, it's great to speak to you.

Christine: OK. So, I want to know, how is it that a man in the UK ends up buying in Canada?

Richard: Well, I have to blame my wife for that; being a Canadian citizen.

Christine: It's always the women. [laughing]

Richard: That's right. It's always the women. But, my wife is Canadian. I have a step‑son who is in the Canadian Army. That's really our connection with Canada. My wife had always dreamed of having a holiday home. My son was posted in Edmondton, Alberta.

Everyone said to us, "Well, Edmondton is a great town, but if you really want a property that you are going to rent out when you are not in the country, you want to be somewhere a bit more attractive in some ways." So, we started looking in Calgary. There are quite a few bylaws in Canada and I think it's the same in certain places in the US.

Christine: Absolutely.

Richard: And so, being a sort of bolshy Englishman, I said, "Well, why can't I rent this out if I buy it?" And they said, "Well, zoning and things." So, when we were in Calgary I said, "Well, where do Calgarians go on holiday? They said, "Oh, there's this beautiful little town near Banff called Canmore." So, that's how we arrived in the town.

Christine: It's interesting that you would have figured out the whole rental laws and rules early on. It happens to be a mistake that a lot of vacation home owners make when purchasing properties is they forget about that little zoning issue or laws regarding being able to rent out your home.

So, anybody listening, if you're looking to buy this is definitely an important point to listen to. Because it's very important that you can indeed, have the right to be able to rent out your home. So, when did you end up buying your home?

Richard: Well, we bought our first property about four years ago. The point you made is very true here in Europe because of lot of the European countries, although we have the EU, their rules and regulations vary a bit with regards to tax laws, inheritance.

Although we don't have any other properties here in Europe, we know that you have to go in with your thinking head on not your holiday head and think how are we realistically going to run this business and manage the property. Because even if you have just one unit and we actually have three between us, and my sister has a property as well in the same building. So, you've got to be aware of these issues right from the start, so you don't have any problems.

Christine: Right. Don't want those barriers early on.

Richard: Well, exactly because some people in the town where we are do rent out their properties without the proper licensing and it can cause a problem to neighbors. Then, they complain and the bylaw offices put a stop to it. That's not a good way to start a business.

Christine: [laughing] No, not at all. It's interesting you're using the word business. You originally thought of it as your wife wanted a holiday home and now you're using the word business. Explain to me, because I know there are a lot of home owners who don't necessarily think of their vacation or holiday home as being a business. Can you explain to me why you're using that word? I think, it's interesting.

Richard: Yes. Well, we originally did buy one property as a holiday home and we realized, from the word go, that we would have to subsidize it in some way. Of course, there are local taxes and we have to pay tax on any income we get; so you're not home free. And, when we were out there setting up the property, we put in our own furniture; we didn't use the furniture package. There were some very good ones, but because there are actually a total of 96 units in the three buildings that we have one property in, we felt that if people were going to stay in the future, it would better if our properties were slightly different, and now, we've found that this works.

My sister came out to visit from England and it was her first time in the Canadian Rockies, and she just fell in love with the place and decided that she would like to invest. Now, we're not a family of eccentric millionaires; it was a big decision. And then, once we had the two properties, I said to my wife, well pensions the world over are not sometimes all they're made out to be, and at least this way, we'll be masters of our own destiny. So, we purchased an additional two units.

Christine: Nice. And, did you purchase in the same building?

Richard: Yes. All our units are lofted apartments, which is great for us for advertising. In fact, earlier today, we had to swap somebody to a different apartment because we had a longer term booking come in, and so, that wasn't really too much of a problem. I phoned the client and was truthful with them, and I think that's always important.

I said, look, we've got a long‑term booking and we can make a bit of money out of it. Would you mind if I swapped your accommodation? And, he said, "Well, if it's similar," and I said, "Well it's virtually identical, you've just got a different aspect." So, that works out quite well and the same for the marketing. We advertise lofted apartments because they are all lofted apartments.

Christine: Right. It certainly does make it easier. I have a situation where I have two cabins that are right next door to each other. And, while my two cabins are a bit different, they're similar in size and they're right next door. And, I do find that even though I do market them both separately and have different web pages for each of them, I do find that there is some crossover. Yesterday, for example, somebody was looking for a specific time in the one cabin and it was booked, so I could have them stay in the other cabin, and it worked out to my advantage and to theirs as well ‑ they were able to find a place.

Richard: Well, that's right. And, we're also lucky in that we can cater for wedding parties and things like that because often the family wants to be together, but they don't want to live in each other's pocket. So, maybe grandma and grandpa come out and they don't really want to be in with the kids, but they want to be part of the celebration. So, we do get a few wedding parties, which is great for us and that works out well.

Christine: That does work out well. Can you hold on one second? We just need to take a break for a word from our sponsors.

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And now, back to our show.

Christine: Now, when you first started renting, how did you learn about the rental aspect? And, what were the measures and steps that you took?

Richard: Well initially, we were approached by a company, which was a sister company to the builder, and they were going to market and rent the suite and take a commission. Now, I don't know what it's like in the rest of the United States, but certainly in our town, they asked for between 40%‑50%.

Christine: That's pretty common.

Richard: That's then handed off to the owner and you just sit back and count the money. Well, the reality was we had a summer with all four apartments empty. And, at the end of the summer, we made a decision as a family that this was ridiculous. We couldn't sit and wait for two or three years for them to get their act together, we had to do something. And, we actually have our own businesses here in England, so we had some business experience, but we didn't really have much experience with the tourist industry, or renting vacation property.

Christine: Right.

Richard: So, we started our own company, which we called Rentalsintherockies.com, and we had to, there again, meet all the local criteria. The company's registered in Alberta as a proper business. We also have to pay a business license to the town of Canmore because we're a legitimate business. And of course, we had to register for what we call in Canada, 'GST', which is 'general sales tax.'

Christine: Correct, which happens to be pretty hefty for the renters.

Richard: Well, we're lucky. Actually in Alberta, the GST is only 5%.

Christine: Oh, that's not bad. It's not like Ontario.

Richard: Yes, Ontario has GST, plus a provincial sales tax, which is another thing, which makes it attractive for visitors. And certainly, with the US dollar being a little bit weak at the moment that helps us out because there is less tax to pay in Alberta for our visitors who come up from the States.

Christine: Right.

Richard: So, we had to get all that organized and get a proper registration number. And, because we were going to run it commercially, the next, and I think most important thing to do is get a good accountant. Now, it seems like a waste of money at the start of things, but once the business picks up, you want to claim back all the legitimate expenses you can.

Christine: Absolutely.

Richard: And, I think, a lot of people do it as a piecemeal thing, especially perhaps, if they just have one unit and it's to subsidize their holiday home. Some of our neighbors, some of whom who are Canadian, we have some Americans, and also another English family come to me, in some ways, for a bit of advice just purely because we did it from square one, and so, we've had to find out all these things for ourselves.

Christine: And you're right, having the accountant on early is definitely an advantage because you learn quickly what things you can write off, what you can't write off, what are things that are worth spending a bit more money on, different types of capital, improvements and stuff like that. And of course, keeping track of all of the money coming in and the money going out, even just that can be a bit daunting, especially here in the States. We have to file our income taxes by April 15th each year, and some people come up on April, and they start pulling their hair out.

Richard: That's right, you've got to be organized and do it in advance. We actually just have to pay our GST tax bill, and we do that well in advance. It's better to do it at your leisure. Maybe, there's an expense you forgotten, or you might have questions for your accountant, and it's no good doing it in a panic at the last minute. You've got to make a note in your diary and prepare for it a month, or maybe even six weeks ahead, and make sure you're on top of that. Otherwise, it just becomes an additional headache you don't need.

Christine: Absolutely. So, then you bought the place. You furnished it a little bit differently than the package deals ‑ great strategy.

Richard: Yeah, we put in plasma TVs, and we made sure the appliances were a little bit higher grade. When we furnished the property, we did overbuy on the cutlery and crockery because we knew some of it would get broken. It's no good thinking you're going to rent something. It's just like buying a domestic house where, unfortunately, children drop things, or you spill something yourself. You've got to accept that from the word go. Nobody is going to need one set of something and use that for the next 10‑15 years. You've got to really make sure you've got some spares that match.

Christine: Yeah, I have that problem at home. I'm like where do all my teaspoons go?

Richard: Well, we have a lovely set of cutlery and crockery in Canada. But, here, at our home in England, of course, like everybody else we have odd cups and knives that don't match the rest of the set.

Christine: You know, that seems to be a problem with a lot of vacation homeowners. We can justify buying that stuff for our vacation homes, but somehow at home, we get the leftovers.

Richard: Exactly.

Christine: It doesn't seem fair.

Richard: Well, I think, it's important to buy additional pieces of cutlery and crockery. One thing I find is if you go to rent the home, if you're the client and you go somewhere and there are odd bits; it doesn't seem professional. You think, well hang on, we paid a fee to go to this beautiful location, and one of the knives don't match. It's a psychological thing, and really, its part of the overall running cost. It's not very expensive.

Christine: It really isn't. And for the most part, they do last for a long time. It's not something you're replacing each week, by any means.

Richard: Quite, and we had the same problem with the furniture. We had to buy things that would look right for the apartments and be in the correct proportion. And once again, my wife and my sister were able to, obviously, help out because only being a man, I'm not really used to choosing the right colors and things like that.

[laughter]

Richard: But then, I would have to step in with my practical head and say "Well, look we need something that's going to be durable people. It's not like home. They're going to put hot cups on nice shiny new surfaces. We need to either protect them with glass or have a surface, which doesn't matter.

Christine: Right. And then even your upholstered furniture, having durable but yet not the most expensive either so that you can change it out once it starts getting worn.

Richard: Absolutely.

Christine: It's not going to hurt your pocket as bad.

Richard: Absolutely.

Christine: OK. So, you did all the furnishing, you set up the accountant, now on to marketing. How did you begin to market your properties?

Richard: Well, the first thing we did was really set up our own website. I think, something that we find a bit frustrating ‑ and now that we are part of the HomeAway network and we also advertised on the VRBO. But, we find that the problem is that people either don't look at the calendars or they don't trust them.

The first question is: "What are the fees" and they're always on your website in the right areas where people don't look or just want to double check and then they always of course want to know if they're still available. So, we have our own website and we make sure that all the other websites are up to date and for us this can be a problem because of the time difference.

Because we live in England. We're in fact seven hours ahead of Alberta. So, we have a very good and skilled and reliable manager in Canmore and thankfully we keep in very close contact these days with emails and now it's much cheaper to phone internationally. The key is to keep in touch. If there are any problems, sort them out immediately but so far touch word, we haven't had any double bookings. But, we have come close just purely because of the time difference.

Christine: Right. Yeah we've all done that. [laughter]

Richard: It can be a problem. Well, of course, then again in the US you have so many different time zones, and if you're getting enquiries from all over the States it can be difficult.

Christine: Now, you make a good point there regarding the calendars. You had said that people don't either see them or don't trust them and I talk about this quite frequently in our seminars and I really try to encourage people to keep their calendars up to date and no matter how much I can say this until I'm blue in the face, there just are a lot of owners who don't keep their calendars up to date. And people inevitably ask me "Well Christine. If it's so important to keep the calendars up to date, so important to keep the rates current and up to date on the website why is it that every single time I get an inquiry the two questions are: Is it available and how much is it?" and really sometimes it doesn't have to do with you and how well you keep your pages up to date.

It has to do with the others who are renting their vacation homes. You don't know what happens with the renter before they got to you. Perhaps they emailed twenty other people, asked them and looked at their calendars and said "Oh it looks like it's open, it looks like it's this price, I'm going to email them" and then those owners get back to them and just say "Sorry. I'm booked".

So, it's not necessarily just about what you do. It's about what everybody does and that's why it's really most important for everybody to get on common ground and really help the entire industry by keeping your calendars up to date.

Richard: Absolutely. And I mean, we first encountered this ‑ This was a problem that we had when we were with this other potential rental company that we monitor their website and we actually were able to book our own apartment when we knew that it was booked. Let's say we had a long [inaudible] email booking so we started rentals in the rocky.com and the first thing we did was make sure that the calendar was up to date at all times.

Now, as I was saying because of the time difference, it can be a bit difficult, but this is where good communications come in and really in this day and age there isn't an excuse.

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